External Managers

2019 highlights

The return for 2019 was 14,1% (USD)

28 out of 29 funds had positive return, with the best fund returning 55%

Additional capital has been allocated to the Asian equity markets



2019 turned out to be a very strong year for most asset classes, even when adjusting for the weak returns at the end of 2018. The global equity market index (MSCI All Country, USD) returned 26,6% in 2019. Looking at 2018 and 2019 together, this index had a cumulative return of 14,7%, equal to an annualized return of 7,1%.

A change in expectations to the FEDs monetary policy and the trade war between the US and China were the prime drivers of market sentiment throughout the year. After having raised interest rates four times in 2018 on the back of strong macroeconomic data, the FED turned and cut rates three times in 2019. The expansionary monetary policy lead to a strong year for interest rates, where US 10-year interest rates fell 77 bps, resulting in a 5,25% return for the corresponding futures contract. Interest rates also fell in Europe; German 10-year rates fell 43 bps, ending the year in negative territory (-19 bps). In Southern-Europe, interest rates fell even more, with Italian and Greek rates being down 1,3 and 2,9 percentage points respectively on the back of investors’ enormous demand for bonds. The large moves in interest rates gave extra support to equity markets, and the American and European markets were up 31,5% (S&P 500) and 29,3% (Eurostoxx 50) respectively.

The trade war between the US and China escalated in May, as the US introduced tariffs on another 200 billion USD in Chinese imports. China responded with an increase in tariffs on 60 billion USD in US imports, whereby Trump banned the Chinese mobile- and telecom producer Huawei. The tension decreased during the fall, and in December, Trump came with strong indications about a first phase of a trade agreement to be signed early 2020. The Chinese equity market (MSCI China) rose 23,5% in 2019, after rising 8,3% on Trump’s indications in December.

Great Britain’s exit from the EU and the political climate in Italy at times lead to nervousness in the market. However, the budget negotiations between Italy and the EU were completed towards the summer, and Boris Johnson got a clear majority of the votes in the December election and a more specific mandate to lead the country’s exit from the EU.

The positive sentiment towards global growth and turmoil in the Middle East with a direct attack on a Saudi-Arabian oil refinery and increased tension between the US and Iran, lead to an increase in the oil price (brent) of 22,7% (+12,2 USD per barrel). Despite a strong year for oil, the Oslo Stock Exchange was up “only” 16,5% in 2019. However, if looking at 2018 and 2019 combined, the return for the Norwegian stock market was 6,9% p.a., not far behind the global equity market index.

Activity and results

The main objective of Ferd’s investments with external managers is to complement Ferd’s direct investments through investments in alternative strategies, other asset classes and different geographies. The four mandates have different risk profiles and diversification properties. Relative Value and Macro have low market sensitivity, while the Global Fund Opportunities mandate is set to exploit our flexibility and capital predictability to make attractive investments in pockets of the capital markets with limited competition. For the Global Equity mandate, the objective is to achieve attractive excess return over time combined with a market exposure that complements Ferd’s total investment portfolio.

Ferd External Managers’ four mandates returned 14,1% in 2019.

The relative value portfolio returned 10,6% in 2019, and the funds’ returns where in the interval 3,4% to 18,1%. As in 2018, the portfolio’s largest investment was also the fund with the highest return in 2019. The macro mandate returned a modest amount of 13,7 MNOK, and where market movements in August lead to one of the fund’s having a negative return for the year.

Assets under management for the Global Equity mandate increased further in 2019, with a new allocation of 250 MNOK in December. The mandate returned 20,2% in 2019, 6,8% higher than the implied return given the funds’ net exposure to relevant markets.  The mandate comprises both long-only equity funds and hedge funds, where the mandate’s net exposure is mainly to the Asian equity markets. The MSCI Asia Pacific ex Japan Index rose 19,2% in 2019.

Global Fund Opportunities had a very strong year, returning 23,2%. All funds contributed positively, but the largest investment was also the one with the highest return.


A total of 177 MNOK was allocated out of the four mandates during the year. Within the relative value mandate, 26 MNOK was returned as one of the funds, like previous years, returned the 2018 profit to all investors. Within the macro mandate, a redemption in July and profit return to investors in another fund lead to 322 MNOK being allocated out of the mandate.

Within Global Equity, we have been in a redemption cycle for one of the hedge funds, and there was an allocation of 250 MNOK in December to Asian equity funds. Net allocation to the mandate amounted to 144 MNOK.

In Q1 2019 we committed to two new funds in Global Fund Opportunities. Net cash flow in 2019 was 27 MNOK.

At the end of 2019, assets under management between the four mandates equalled 4,8 billion NOK, divided between 18 different managers.